India has abruptly called off high-level talks with Pakistan after the Pakistani high commissioner in Delhi invited a Kashmiri separatist leader to tea.

The meeting of the two quarrelsome neighbours' foreign secretaries in Islamabad next week would have been the first in 18 months.

It was scheduled after Pakistan's prime minister, Nawaz Sharif, accepted an invitation to attend the swearing-in ceremony of his Indian counterpart, Narendra Modi, in Delhi three months ago.

The first signs of a relapse came during a visit by Modi to the Buddhist Ladakh region of the disputed Jammu and Kashmir province, when the Indian leader accused Pakistan of conducting a "proxy war of terrorists" and said it had "lost the strength to fight a conventional war".

But Modi did not criticise Pakistan in his independence day address last Friday, raising hopes for the talks.

For several years, meetings between Kashmiri Muslim separatist leaders and Pakistani envoys in Delhi were a regular prelude to any major India-Pakistan dialogue. The last one took place in April.

But this time India's foreign secretary, Sujatha Singh, told the Pakistani envoy Abdul Basit: "You can have a dialogue with India or with separatists."

Basit ignored the warning, and shortly after the Kashmiri separatist leader Shabir Shah drove out of the high commission, Delhi declared the talks were off.

Yasin Malik, a Kashmiri leader, said: "This shows India does not want to discuss the Kashmir issue with Pakistan, only trade. They are pushing the new generation of Kashmiris on to the violent path."

Aziz Ahmed, a former Pakistani high commissioner, defended Basit's meeting with Shah. "You have to consult these people regularly because they are part of Indian-held Kashmir and they have to be kept on board in order to find an amicable solution that is acceptable to everyone," he said.

Ahmed said India needed to recognise that Pakistan had considerably softened its stance over the years.

But India's ruling Hindu nationalist BJP party said: "This time it was the last straw on the camel's back. This time we're telling Pakistan: you'll have to walk the extra mile if you want to improve relations."